Franking Credits: how good is free money?

Bank shares have shot up since Labor's franking credits policy was shot down in flames.

Franking Credits: how good is free money?
Image: Tim Wilson (Image courtesy http://featurettes9.rssing.com)

The cat is out of the bag. Bank shares have shot up since the surprise election result as new investors pile onto the great franking credits bandwagon, Sandi Keane reports.

•••

“Hey, you got any of these franking credits,” older bloke asks mate. It’s two days post-election. I’m on my regular break from my home desk with my dog, Mackie, in Kew’s affogato central. Leafy Kew was at the heart of Kooyong’s electoral battleground. The two men are at an adjoining table at the cafe. They’re talking about the “franking credits” campaign – the pitched battle to win the retiree vote. “No,” is the reply, “but I’m gonna look into them.”

That night, I’m on my way to Hamer Hall to an ACO concert with old pal, Rex. “I’ve transferred all my money into bank shares,” he announces, awaiting my reaction. Then to press home the point, he jabs me in the ribs “I not only get all that free money, but the share price has gone up!” He laughs. And he voted Greens!

Fast forward to the end of the week and I’m back in Kew cafe-land with the four-legged one, getting my coffee fix again. It’s a different cafe. We’re seated outside. A couple of elders go past. My ears prick up….they’re talking about “franking credits”. But they’re not congratulating themselves for keeping Bill Shorten’s hands off their “free money”. No, they’re wondering how they can get their hands on some! Jeez…

Seriously, how good is Tim Wilson and cousin Kevin, or is it Geoff?

Few of us silly old duffers had a bloody clue about “franking credits” until Tim and cousin Geoff started jumping up and down championing the unique advantage of owning shares with “franking credits”. And how good is Australia … the only country in the world to offer a cash reward!

Tim took care of the Parliamentary Inquiry and the town hall meetings focussing on the high retiree states of Tassie and Queensland. Geoff harnessed his travelling roadshow, Wilson Asset Management, and headed up north to spread the word. Between them, they sparked ire in the hearts of Queenslanders and Tasmanians. Not only would they lose all that free money, but the world as they knew it would end. Worked a charm.

Post-election, Geoff was itching to congratulate himself for alerting the voters about franking credits. And avoiding Armageddon. Claimed his campaign helped deliver a fatal blow to Labor’s hopes of election. But he’s too modest by half. Thanks to the Wilson boys, not one of the nearly four million over 65s would now be unaware of the “free money” gig when they retire. What a legacy, boys!

So, now we oldies have been enlightened, have we shown our gratitude, especially to Tim?  Such a formidable force for good should surely have been promoted to cabinet!  What’s wrong with ScoMo? This reporter still remembers saluting Tim for duking it out (single-handedly, mind) against the Labor Government’s “plain packaging” proposals for ciggie packets.

Wilson the Younger stormed the airwaves on behalf of Big Tobacco, clocking up 13 radio interviews in one day, a robust opinion piece in The Australian, and managed to pop up, fresh as a daisy, on prime time 7.30 Report that night. Be afraid, he warned. Be very afraid. This outrageous plan would cost the public $3 billion in compensation!

If our government took away a company’s logo, it could be seen as stealing! Good to see Tim working with the government and on our side now!

So, on 22 May, I put out a Tweet to gauge the level of gratitude to Tim. It’s had over 10,000 impressions as of 28 May:

and again the next day, over 10,000 for the first Tweet then jumping to over 20,000 for the second:

I was inundated with responses. Was a spot worried I’d be seen as a self-serving, greedy oldie, you know, one of those “solipsistic slackers” that journos like Bernard Keane like to target. There was the expected bit of unfriendly fire – but, by and large, I could tell the Tweeps were genuinely grateful to Tim.

Does anyone in Australia now NOT KNOW they can get #FreeMoney for investing in things like banks if they’ve retired and want to set up their own fund? And the more of you who buy shares, the more the shares will go up! Double whammy! Win, Win! Whoohoo! As I said, “how good is Tim Wilson?” Get into it, guys. Follow me!

If you still want the nitty gritty on those franking credits, check out our Kitchen Table series by the redoubtable Westy who has translated complicated financial bafflegab into simple words that even I can understand (I call it “Franking Credits for Dummies”). Start with the one below:

The Kitchen Table: a Franking Credits Revelation

Editor’s Note: Treasury found up to 230,000 pensioners would have been affected by Labor’s original policy. “The value of franking credits refunded has increased from $1.9 billion in 2005-06 to $5.9 billion in 2014-15,” Treasury found.

This article originally appeared on www.michaelwest.com.au and has been republished with permission from the author.

•••

Sandi Keane is MW editor-in-chief and was formerly editor and environment editor at Independent Australia. She has $15,000 worth of franking credits in her SMSF and, until recently, never knew how they got there.

Still don’t think franking credits policy will be reviewed? Are you one of the many retirees now taking advantage of Franking credit refunds? Do you think it’s possible that this ‘windfall’ for the banks post-royal commission was somehow planned?

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    COMMENTS

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    Keith
    30th May 2019
    10:31am
    Free money....what a load of BS. It’s basically a tax offset for Tax that YOU as a company owner (shareholder) have already paid.
    Mmmm...I wonder what would happen if the FULL dividend before tax was paid out. Gee, there’d be a few worried people on both sides of the fence then.
    TREBOR
    30th May 2019
    10:42am
    Not so - it is tax paid on behalf of the shareholder, and must be included in the shareholder's gross income for calculation.

    You show clearly the deliberate confusion created around this very simple issue, and the clear reason for one simple change - abolish dividend franking.
    TREBOR
    30th May 2019
    10:44am
    The next step is to ensure that the tax matters of all are being handled correctly according to the rules - and some of those rules clearly need to be changed.
    Old Man
    30th May 2019
    10:52am
    I agree, Bob, either let it be or abolish it. Labor took a half-arsed approach by allowing some to have it and others to be denied it. Australians are very proud of the fact that Jack is as good as his master and won't cop a class war.
    jackie
    30th May 2019
    12:58pm
    Keith, if it's not FREE money then why are taxpayers footing the bill?

    Why are more Australians getting Franking Credits?

    Why are Franking Credits unique to Australia and not the rest of the globe?

    Welfare for the rich was created by the LNP whereas welfare for the poor was created by the ALP.

    Australia has the highest deficit in history thanks to welfare for the well off and tax evasion loopholes which this Government does not want to close.
    jackie
    30th May 2019
    1:03pm
    TREBOR, this Government supports Centrelink Robo Debt and harasses innocent Australians that owe nothing from years ago to fix up the debt instead of stopping tax evasion loopholes and Franking Credits.
    arbee
    30th May 2019
    1:10pm
    Jackie, get over it, YOU LOST, and now with nothing left but numb nuts in your preferred party, you may be in the wilderness for some time now.
    tropic
    30th May 2019
    1:13pm
    It shows that Keith and others still have no idea about franking credits. Of course it's free money. Corporate tax is returned to the share holder. So companies pay effectively no tax. If all bank shares were owned by retirees, that bank would return all their company tax to shareholders and the government would receive zero. That's how it works. And any retiree who does not get onto the gravy train is not doing him or herself a favour. Just wait for the Libs to close it down though. Their scare campaign has done it's job and they will now adopt Labor policy.
    Farside
    30th May 2019
    2:27pm
    +1 Tropic. I just hope more pensioners and SFRs pile into banks etc chasing credits (i.e. free money) and enjoy them while they can. Please old people, do not whinge when you lose the equivalent amount or more on falling share price. Choices have consequences.
    jackie
    30th May 2019
    4:25pm
    arbee, I will not get over an unjust that robs the poor to give to the rich.
    Circum
    30th May 2019
    9:26pm
    The taxpayers are not footing the bill for franking credits.Only a refund of overpaid tax,If you cannot see this Jackie perhaps a brain transplant might help.
    Circum
    30th May 2019
    9:26pm
    The taxpayers are not footing the bill for franking credits.Only a refund of overpaid tax,If you cannot see this Jackie perhaps a brain transplant might help.
    Rae
    31st May 2019
    9:19am
    jackie the poor are not being robbed. Around $120 billion in welfare is redistributed. Spending has consequences.

    The Government should concentrate on building jobs and public housing and stop picking winners and losers to attack.
    TREBOR
    30th May 2019
    10:41am
    As long as tax matters are handled correctly (not just legally - some of that needs to change), there never was any argument about franked credits, for the simple reason that the percentage paid in advance by the company is part of the shareholder's gross income. Plainly that has not happened, and the easiest way is to revert to 'company pays its company taxes', 'shareholder pays personal income taxes' as required.

    There remains confusion about company taxes - they are, however, separate from personal income taxes levied on shareholders, and this must be absolutely clarified once and for all - shareholders have NOT paid tax via the company meeting its tax obligations, and thus are not exempt from personal income tax.

    All that needs to be made totally clear is whether or not a company may take shareholder dividend payout as a tax deduction - once and for all.

    The current confused mess seems to me to have been quite deliberate and calculated for benefit of a few.
    MICK
    30th May 2019
    10:48am
    The article is about idiots talking to other idiots. The notion that banking shares are the best thing since sliced cheese will be shown for the BS it is. Like Telstra pays good fully franked dividends, but the prices of the shares keep going down. Its the behaviour of idiots to get a good return whilst the capital keeps going down.

    The whole argument about franking credits is flawed. We were prepared to cop a hit to our modest income but other greedy Australians were not. The rest is history and after a right wing media promotion of their man. Labor shot itself in both feet and has itself to blame for losing an unlosable election.
    Captain
    30th May 2019
    11:22am
    If these people talking about now knowing about franking credits and "how to get free money" then I believe that most of them will do their dough.

    If you did'nt know before then you knew little about finance and that is a sure way to lose your money. I suppose these folk never heard of Poseiden in the 70's or tulips in Holland several hundred years ago.
    Farside
    30th May 2019
    2:33pm
    Lions and lambs people. If these "investors" do their dough chasing credits then so be it. Choices have consequences.
    jackie
    30th May 2019
    4:31pm
    MICK, the Royal Commission into banks that the entire NLP voted against several times each exposed banks.

    So many NLP family members work for those banks.
    TREBOR
    30th May 2019
    11:48pm
    You are correct, Mick - franking credits are still a proportion of a dividend on share, and if the share goes down, so does the franked component.

    I've posted the ATO and ASIC links before, and clearly the percentage of franking is determined by the company's operations and must be passed through ASIC. If the company is suffering and haemmorhaging money, the franking component of a share will drop.

    Apart from that - the actual reality is that franking credits have become totally confused with company tax(es) and shareholder personal income tax... and that can only have been a deliberate ploy. Company and shareholders are NOT one and the same, and each has a burden of tax to pay on profit income, same as anyone who works for a living.

    Obviously Labor and LNP are so deep in this they will never sort it out.
    4b2
    30th May 2019
    10:45am
    Welfare for the wealthy.
    Discontented
    30th May 2019
    11:34am
    yea I get some money from franking credits. Ahhh it going to cost the government money, but wait a minute I don't cost the government pension money I don't get a seniors health card. Oh got my own house so no rent rebate. Why do I not feel the love for looking after myself, instead I feel hatred coming my way.
    Discontented
    30th May 2019
    11:34am
    yea I get some money from franking credits. Ahhh it going to cost the government money, but wait a minute I don't cost the government pension money I don't get a seniors health card. Oh got my own house so no rent rebate. Why do I not feel the love for looking after myself, instead I feel hatred coming my way.
    thommo
    30th May 2019
    1:02pm
    Thats correct 4b2....This issue gets a completely different twist to it compared to the change in the pension assets test in the 2015 budget by Morrison and Abbott, when about a million part-age pensioners either lost their pension altogether or it was drastically reduced, thereby stuffing up their legitimately planned retirements for the duration.
    Not a squeal out of the the very same high earners about this broken promise, but who are now squealing about losing their free taxpayer funded franking credits largesse..What a bunch of hypocrites..
    But it will all soon come to an end, because the budget "bottom line" dictates that it cannot be sustained and must be reigned in and halted.
    jackie
    30th May 2019
    1:05pm
    Discontented, your Franking Credits pay more than the pension that is why you have them.

    This means Franking Credits cost taxpayers more than pensions.
    Paddington
    30th May 2019
    8:30pm
    Discontented, if you are not in receipt of the Senior Health Card then you are very well off. It is a very generous cut off at $54,000 for singles and $86,000 for couples.
    It is not hatred, it is about fairness. Maybe now you will be eligible for a Seniors Health Card assuming your income will be reduced below the stated amounts.
    There is no shame in a part pension either.
    If you were to lose your franking credits that money would hopefully go to schools and hospitals or something to benefit everyone.
    People are not stating the amount of the franking credits or how it will affect their income.
    People know what pensioners get but others don’t state their incomes on here or how much the franking credits are.
    Like many other people I did not even know of their existence until all this ruckus.
    Rae
    31st May 2019
    1:06pm
    Paddington schools and hospitals are State responsibilities and won't get extra funds at all.

    Tax just removes money from the economy to control inflation. We have no inflation problems which is why tax cuts for workers and business owners is being planned.

    GST and Stamp Duty etc is used for schools and hospitals by the States. They had more money before privatising everything as well. That foolish action cost State revenue.

    Not everyone wants to jump through Centrelink hoops or depend on the welfare system.

    Encouraging decades of savers to delay gratification to fund themselves with existing rules and then changing those rules at the end is not cricket.

    And shame is in the belief, thoughts and feelings area. No more wrong than believing welfare when you could have supported yourself is right simply because you are eligible.

    My income is well below the $54 000 but I'm not receiving credits or welfare as I value freedom and independence far too highly to apply just yet.

    jackie what are you on about. Franking credits do not pay more than the pension.

    The average payout in franked shares is in the hundreds of dollars annually.

    You'd need to have around $600 000 to $800 000 in shares to get the $40 000 the aged pension pays to those unable or unwilling to save.

    Why bother saving at all to buy risky shares when the welfare industry will give you risk free return for spending all your money?
    Paddington
    1st Jun 2019
    6:03pm
    Rae, aged pensioners do not get $40,000. If you are getting less than $54,000 why would you not get the Senior Health Card? There is no shame in that.
    A couple can have up to $86,000 and get the Senior Health Card which I am sure would help save some money.
    I don’t think you are right about people only getting hundreds of dollars because most are saying $7,000 or more. This govt will also examine this in their review.
    There seems to be a slur in your last statement against pensioners, not at all nice to do that!
    Young
    30th May 2019
    10:48am
    It is NOT free money.
    As a shareholder tax was paid and I get a credit for it.
    I knew about it when it was first introduced and bought shares to plan for my retirement.I am not a wealthy person and the $3000 I get each year was going to be taken away from me by the Labor Party who claim they are for the workers.
    tropic
    30th May 2019
    1:17pm
    It is free money. Company tax was paid, not your tax. Retirees get the company tax returned to them. Wait for the Libs to adopt Labor policy now that everyone knows about the gravy train.
    thommo
    30th May 2019
    3:21pm
    Correct topic...(see my blog above)
    Susanb
    30th May 2019
    10:48am
    Well, this governments made their bed .,.
    Old Man
    30th May 2019
    10:49am
    Australians voted on May 18th knowing that franking credits was a policy of Labor and rejected Labor. That wasn't the only reason as the climate policy was a mystery and the best Shorten could do when asked about the cost was to give the non-answer that the cost of doing nothing would be worse. A cynic could suggest that if he knew the cost of doing nothing then he would know the cost of doing something as a comparison.

    A lot has been made of the "quiet" Australians who voted for anyone but Labor and this site is a perfect example of what makes the "quiet" voter. Anyone who chooses to post in this forum anything against Labor or in support of the Coalition is abused with personal attacks. There is no rebuttal of statements with counter arguments or facts, just vilification. It then becomes easier to say nothing and let the bullies have their way or if asked for an opinion by a pollster tell them what you think they want to hear.
    Paddington
    30th May 2019
    12:10pm
    Three trillion is the cost of doing nothing. You cannot possibly continue to deny climate change and if you do, then is it worth the risk you are wrong?
    More coal being dug and water used to support that is horrendous.
    Jobs for Aussies in doubt as India is reliant their workers at home now.
    Governments selling their souls for the almighty dollar but the cost is more than money.
    Abuse and personal attacks have been far worse from right wing and their supporters. Lies perpetrated by Palmer and LNP went beyond anything we have ever seen. My brother can attest to that on the ground in Qld.
    Greens are continually criticised and lied about and yet they are the only ones prepared to go the whole hog to protect the environment. Now the Qld premier has caved in to Adani because she is scared for her job.
    Low paid workers are not protected by the right side of politics. What does that say? Poorer people spend all their money so are vital to the economy. Every cent you give to them they spread around in their local communities. What percentage do you think they prop up the economy with that?
    Wealthy people save the money.
    I have no issue with people being wealthy so long as they help with charities and many do but not enough.
    Paddington
    30th May 2019
    12:11pm
    Correction: workers are being (trained) in India now
    Tom Tank
    30th May 2019
    12:14pm
    The issue on the cost of a climate change policy is that quite frankly a cost cannot be put on it. If Shorten had put a dollar figure on it he would have been lying. The question asked was on a par with asking if you'd stopped beating your wife.
    It is also the case that the cost of doing nothing about it will be horrendous. There is a lot of indications around the World that climate is changing and, by the Earths time scale, quickly.
    Tom Tank
    30th May 2019
    12:14pm
    The issue on the cost of a climate change policy is that quite frankly a cost cannot be put on it. If Shorten had put a dollar figure on it he would have been lying. The question asked was on a par with asking if you'd stopped beating your wife.
    It is also the case that the cost of doing nothing about it will be horrendous. There is a lot of indications around the World that climate is changing and, by the Earths time scale, quickly.
    KSS
    30th May 2019
    12:16pm
    Well said OM.
    Old Man
    30th May 2019
    1:18pm
    Paddington, I believe that there is climate change, what I have issue with is how much of it is man made. If Australia stops digging up coal and exporting it today, it will have no affect on pollution because China and India will source their coal from other countries. Australia will have higher unemployment, an increased deficit and a lowering of living standards.

    You have no proof that India is planning to bring workers for the Adani project, the CFMMEU would never allow that to happen. That's the same CFMMEU which asked voters in Queensland to reject Labor as they wouldn't support the Adani project. Yes, Palmer lied but I can't agree that the LNP in Queensland also lied. The Greens are hypocrites, the fossil fuel guzzling convoy to save the planet backfired and increased the LNP vote in Queensland.

    Tom Tank, I don't agree that a cost can't be put on a climate change policy. All policies must have an objective, an outcome and a cost to the nation for them to be credible. Labor wanted to increase the number of businesses that would pay for their pollution and that has a cost which must be given. Any business that has a cost added must find the funds to pay for that cost. If it cannot be absorbed in general trading then either jobs are lost or the price of their product must rise.
    ardnher
    30th May 2019
    2:03pm
    when it came down to not having money to pay your utility bills or paying who knows what in taxes for climate change...people voted via the hip pocket...and they always will!
    inextratime
    30th May 2019
    2:20pm
    Paddington I take it you no longer use a mobile phone, drive car or eat meat ? Maybe not fly in an airplane or ride on a bus ? If you still do then why ? You cannot argue for CC but take no effort to reduce your own carbon emission. Maybe your argument is that as one person you would not make any difference. Well check out what difference Australia can make on CC without the three biggest carbon emission countries, India, USA and China reducing their emissions. Zilch. Same argument. Maybe you could join Bob Brown on a caravan to Beijing.
    inextratime
    30th May 2019
    2:20pm
    Paddington I take it you no longer use a mobile phone, drive car or eat meat ? Maybe not fly in an airplane or ride on a bus ? If you still do then why ? You cannot argue for CC but take no effort to reduce your own carbon emission. Maybe your argument is that as one person you would not make any difference. Well check out what difference Australia can make on CC without the three biggest carbon emission countries, India, USA and China reducing their emissions. Zilch. Same argument. Maybe you could join Bob Brown on a caravan to Beijing.
    ozrog
    30th May 2019
    3:49pm
    Now i know you are a Liberal stooge
    jackie
    30th May 2019
    4:40pm
    Paddington, climate change action could start with the type of shares to invest in.

    Stop investing in companies that are destroying the environment and banks that do the same.

    Environmentally, conscience decisions can make a huge difference.
    Paddington
    30th May 2019
    8:40pm
    Yes, it is true people are being trained in India. At what capacity and how many there were no details on that however.
    About meat etc. yes that is possibly coming too, cutting down for a start.
    We don’t use the car much. Mobile is mainly for emergencies. They are good questions that we will have to address soon.
    I refuse paper and demand emails of documents etc.
    I can’t fly so that is a given. Never assume, just ask!
    Yes, agree, we need to be mindful each and every day and do all we personally can and learn what makes differences and help to educate others.
    We need to be an example on an individual level and globally.
    Circum
    30th May 2019
    9:54pm
    time to take a Valium Paddington,you are hallucinating
    Circum
    30th May 2019
    9:54pm
    time to take a Valium Paddington,you are hallucinating
    Rae
    31st May 2019
    9:26am
    You are right pafddington. When I spent all my money I was always poor and struggled to even pay the bills.

    Once I cut down spending and saved a little bit I soon became "wealthy" in that I could pay my bills and not worry about emergencies.

    Definitely a correlation there.

    Pity attacking savers is a thing now.

    $3 billion dollars of a fuss but welfare is $120 billion annually and growing.

    Keeping those people off the aged pension could be as sensible as paying rebates for private education or private health fund membership.

    Besides until we have inflation we haven't a need to raise taxes. In fact tax cuts are coming.

    Leaving savers alone for a year or two after the past few years of attacking them could be a good move.
    Farside
    31st May 2019
    10:21am
    Rae, social security and welfare budget for 2019/20 is forecast at $180.1 billion or roughly $7000 for every man, woman and child (and all other genders in between).
    libsareliars
    31st May 2019
    12:52pm
    Well said Paddington, agree with you entirely.
    Rae
    31st May 2019
    1:16pm
    Wow Farside. That is an indication that something is very wrong. That's an incredible amount of money to redistribute and still have those getting it wanting to take $3 billion from those who saved to buy shares for themselves under existing rulings.
    Janus
    30th May 2019
    10:51am
    Let's have a guess as to how long it will be before the Libs decide that the deal is too good, and that retirees are a soft target, and remove the franking credits rort. Won't be long, because it is too expensive for our weak economy to handle. A year? 18 months? or maybe some other way to rip the old folk off, so that we are all just where we started, or worse off.

    You might then think of the word "hypocracy" and wonder if you were duped by the recent election campaign. or maybe just consider that your greed is good for a few quid whilst the going is good, and stuff the country, not your problem.

    The Libs have already lied, with the tax cut deferral. 1, and counting. Mind you they were smart enough to not actually make any significant promises, so that they would not be forced to break any!
    Paddington
    30th May 2019
    12:00pm
    They are doing a review now of retirement income so guessing they will look at it and cut if able to get away with it. If they could lie so efficiently during the election, why would anyone believe anything they say.
    ardnher
    30th May 2019
    2:03pm
    well many on here will be happy if the franking credits goes for those who do not pay tax.
    Farside
    30th May 2019
    3:12pm
    Don't feel too sorry for the old folk should the Libs decide that the deal is too good. Most of them and no doubt many of their families voted Lib in full knowledge that retirees are a soft target. Choices have consequences.
    Misty
    30th May 2019
    11:55pm
    Well Janus someone commented on another YLC'S topic today that KPMG advised the LNP to look at Franking Credits and Negative Gearing as Australia cannot afford thwm.
    Rae
    31st May 2019
    9:44am
    It will give some savers a chance to get investments out of the ASX and into foreign markets .

    Franking credits don't come but capital gain is greater because companies reinvest profits for growth instead of paying them out in dividends.

    Franking credits will probably be cut for non taxpayers and that should include all non taxpayers not just one select group with other groups quarantined.

    If loss of income forces an influx into Centrelink then pensions may be cut or the family home included in the asset test.

    Wishing loss on others comes with consequences.

    When did we become so nasty and spiteful and why?

    Nobody fussed when hundreds of thousands of retirees lost their incomes in 2016/17. In fact many were glad. It's a free for all now after that success by Government. Anyone is fair game and grandfathering dead and buried.

    Here we see that same nastiness against our own.

    We redistribute $120 billion to welfare. It's enough if people live within their means .

    A full list of tax concessions, rebates, levies etc and looking at each may be needed if we really want a recession and it seems we do.

    A surplus in a drought in Australia has always caused a recession. Always.
    Bazza51
    30th May 2019
    10:52am
    The refunding of tax collected by the government and refunded at tax time so that a company is not DOUBLE taxed is not free money, it's not a gift and it's not charity. I'm starting to wonder about the motives and qualifications of the people that run this site. there appears to be no fact checking a lot of the time. I was forced to buy shares when I sold the family home to downsize in retirement. The Government doesn't allow me to put these funds into my Super fund ( industry fund ) as I can't pass the work test. So the options were Bank interest 2.8% or shares that pay dividends around 5 - 7%. I chose shares ( not in an SMSF ) owned as an individual. I would prefer that the government doesn't tax these dividends at all and it becomes income to the shareholder who then sorts out his own tax liability at tax time, a bit like the rest of the world does.If I hear the word gift or free money I will freak out. The other inference in this article is that shares always rise in value, well they don't so there is risk involved as well.
    Rae
    31st May 2019
    10:12am
    True.

    The other way out would be to not include pre taxed dividends as income for tax purposes. That would also eliminate double taxing of these investment returns.
    Bazza51
    30th May 2019
    10:52am
    The refunding of tax collected by the government and refunded at tax time so that a company is not DOUBLE taxed is not free money, it's not a gift and it's not charity. I'm starting to wonder about the motives and qualifications of the people that run this site. there appears to be no fact checking a lot of the time. I was forced to buy shares when I sold the family home to downsize in retirement. The Government doesn't allow me to put these funds into my Super fund ( industry fund ) as I can't pass the work test. So the options were Bank interest 2.8% or shares that pay dividends around 5 - 7%. I chose shares ( not in an SMSF ) owned as an individual. I would prefer that the government doesn't tax these dividends at all and it becomes income to the shareholder who then sorts out his own tax liability at tax time, a bit like the rest of the world does.If I hear the word gift or free money I will freak out. The other inference in this article is that shares always rise in value, well they don't so there is risk involved as well.
    B5YCK
    30th May 2019
    12:40pm
    I am fully with you on this.
    Ask myself the question why this extension of the labor movement in the form of this "your life choices" is so far left from the left.
    Anything promoted by the right side of politics is always criticised.
    They will promote taxing the people who earned it to give to the people who did not earn it.
    Not that I am against helping the needy, but object giving it to no hopers!
    Don't they realise that the shareholder is taking a risk in investing their money into an industry which gives employment and gives in turn income to them. But sometimes a company goes broke and the sahreholder loses all.
    jackie
    30th May 2019
    1:16pm
    Bazza51, don't worry, it's not the ABC. You don't have to fear them any longer. Ita Buttrpse was appointed to be the Chairperson by Morrison to shift toward a very biased right-wing Murdoch voice.


    The truth can be dangerous as Julian Assange has shown, especially when most media is run by Murdoch who has no moral conscience.

    I suppose you will put in a complaint about the journalist because the truth does hurt.
    Misty
    31st May 2019
    12:16am
    If that is the way you feel about YLC'S BSYCK I don't know why you bother to visit this site.
    Paddington
    30th May 2019
    11:40am
    I already knew all this. As stated on other topics my brother worked on the pre polls in Qld and young and old were stating that ‘Grandma won’t be able to buy Xmas and birthday presents.’
    People are now aware for sure and are seeking these shares that attract franking credits. What’s bad about this is it will force the government to review franking credits because they are about to blow out massively.
    Just remove the term, ‘franking,’ and allow it to pass into history.
    People should be warned not to rush in and organise their money around this because it is not sustainable.
    Sundays
    30th May 2019
    6:25pm
    AEC RESULTS: First Preference Votes;

    Labor 4,524,457
    Liberal 3,548,653

    ‘Hardly a “Wipeout” for Labor. The Rest by Lies and Deception’
    Misty
    31st May 2019
    12:18am
    Where would the Libs be without the Nats to back them up and hopefully next time around Clive Palmer will have finally learned that Australians do not want him in Parliament.
    libsareliars
    31st May 2019
    1:08pm
    Yes Misty, the Libs would never get in if they stood on their own like Labor do. They have to have a Coalition of Cretins to get back in.
    johnp
    30th May 2019
    11:41am
    even though I benefit for a few thousand $$ it seems to me that its not really defensible when considering all factors plus other countries do not have such a largesse
    Kaz
    30th May 2019
    12:01pm
    Thankyou. An honest John!
    KSS
    30th May 2019
    12:49pm
    Why do you care what other countries do?

    There are many many countries that do not pay any aged pension to anyone. Do you want to follow that too? Or what about the countries that have no public free healthcare? Should we go that way?

    Or how about those countries with lower electricity prices because of the employment of nuclear power? Can't we copy that too?

    Or perhaps you would be happier of we adopted the same 'election' protocols of some overseas countries who reject the free vote?

    This constant harping about what 'other countries do' is irrelvant. We are not in another country we are here and we just had a free and fair election for all of us to decide on the next Government. Its done. Let's move on.
    Paddington
    30th May 2019
    1:17pm
    Ha ha KSS, so they all have it wrong? It is not irrelevant because it is comparable with similar countries. Maybe they should all introduce it following our lead lol.
    Rae
    31st May 2019
    1:23pm
    Other countries issue dividends before tax and taxpayers deal with the tax themselves.

    If tax has been paid then perhaps the dividend should not be added to taxable income at all for tax purposes. That would upset the wealthy who use franking to lower taxes and this change didn't affect that did it?

    So non taxing pensioners and rich high income earners get to keep their credits. How unfair was that and you wonder why people voted against the idea.
    Kaz
    30th May 2019
    12:00pm
    What I realised when I got old enough to get on this site was how greedy and selfish comfortably-off older people can be!
    KSS
    30th May 2019
    12:54pm
    And just how greedy, selfish and whiney less 'comfortably off' can be.


    Those 'comfortably off' as you describe them made sacrifices, saved and worked hard towards their çomfortable' retirement. Why should they now be punished for doing so?
    Paddington
    30th May 2019
    1:22pm
    KSS, good on them but also lucky in that life did not deal them something that prevented that. Wealth is fine for sure and gives those people an opportunity to help others and support charities. I am one who does not begrudge the pollies their money because I would never do that job because of the abuse and thankless constituents. I just hope they use their money for good and spread it around. Unfortunately, it is the poor who spread their money around and help the economy with their spending. There are good people who happen to have money and make a difference for others.
    jackie
    30th May 2019
    1:42pm
    Kaz, You have to excuse them because money can change people.

    Everyone in life has made sacrifices, saved and worked hard.

    Some more so that others despite never being as fortunate as others because they were never ruthless.

    Caring and sharing is a generous trait that is never shared by mean spirited individuals.
    Rae
    31st May 2019
    1:34pm
    Yes Paddington if we all spent everything and spread it around there would be no wealthy to be jealous of. We'd all be poor together. Still the way it's going that could very well be the outcome anyway regardless of the fact that a minority do try to save and invest to support themselves in retirement.
    Dongers
    30th May 2019
    12:01pm
    Another leftist article by a leftist publication. You guys lost on the 18th - acknlowdge the will of the people and stop with the FALSE ARTICLES and undermining the economy and confidence of the people.
    Paddington
    30th May 2019
    12:14pm
    So left equates to honesty and accuracy and right means lies and distortions?
    Cowboy Jim
    30th May 2019
    3:53pm
    Paddington - the election is over so stop the class war. Left has too much are stuff all and the Right has ordinary people who try to get along with what they have got. I know millionaires and I am not jealous of them and when we have drinks we all pay for our share.
    jackie
    30th May 2019
    5:01pm
    Dongers, the truth needs to be exposed at times because the lies, manipulation and brainwashing of the very biased right media has to be put in a different perspective.

    If that wasn’t so we would be living in a dictatorship.
    Paddington
    30th May 2019
    9:51pm
    Cowboy Jim, my comment was in response to Donger’s. Look back at his then mine, it was not a general comment. Look at what he is referring to and my summation of that.
    I am defending the above article.
    No comment on the election! When I comment on the election, I will be clear.
    Mad as Hell
    30th May 2019
    12:12pm
    230,000 retirees keeping $5.9 billion p.a.
    330,000 part pensioners had $250 million p.a. stolen
    Why?
    Rae
    31st May 2019
    1:47pm
    It makes no sense. There was no inflation then and they were cutting taxes and lifting rebates so there was absolutely no need to cut part pensions at all.

    It was more like $2.2 billion if you add the public servants hit. It simply caused saving and disposable income graphs to head south. You can see that easily in the graphs. The penalty rate cuts spurred the fall on as well. It was foolish.

    Aiming for a surplus in a drought is pretty stupid. We are taking bets on the timing of the next banking crisis here.

    It was ideological. There was no outrage because spenders are always jealous of savers regardless.

    We are lucky that money wasn't removed from the economy. That would have cost thousands of jobs as those savers simply stopped spending.

    Most who saved to buy shares are capable of frugality and delaying gratification. That is what Labor didn't understand.
    KSS
    30th May 2019
    12:23pm
    Just wondering whether all those flooding to the banks and putting all their savings into bank shares (or any other fully or partially franked shares for that matter) are the same people who just a few short weeks ago were whinging about the banks? And do they understand that shares can go down as well as up and that the franking credits are variable? And that in any case, franking credits are not "free money" in the first place.

    Can't help thinking many of these 'investors' are heading for a fall. Then who will they whine to?
    Rae
    31st May 2019
    2:02pm
    It is incredible that a system has been set up that people don't understand.

    Remember back when you just got an aged pension at 65 end of story. We still managed to run schools and hospitals and redistribute to the few who needed support.

    $180 billion spent and still we have homeless. Something in the tax and redistribution system is haywire. It needs sorting out.
    kamelmusic
    30th May 2019
    12:38pm
    Shows how many in Your LifeChoices are still bitter about the election result, where Australia as a whole saw the injustice of Labor's 'double taxation' attempt. As everyone really knows, my taxation has been paid in advance for me by the company, and I can now still use that fact in my tax submission.
    Willfish
    30th May 2019
    12:39pm
    If you think the seniors are cheering about the franking credit handout, give a thought to those on over $180k incomes who collect nearly 75% of the franking credit money handed out by the government. A poorly thought our policy by Labor who adopted a scatter gun approach that tried to shoot everyone down, not just the wealthy with their snouts in the trough, and a great job by the media and Liberals for completely misrepresenting the facts of the issue and pretending it was "double taxation". Australia is the only country in the world that is stupid enough to have franking credit refundability to those who don't pay tax, and only one of 5 OECD countries that still have franking credits, after most advanced countries gave it up as a sick joke. I have no doubt that sooner or later this issue will come back to bite the Liberals on the butt. And yes, I get franking credits, but I still see it as a ridiculous handout.
    KSS
    30th May 2019
    12:42pm
    So you refuse the credits then?
    Misty
    31st May 2019
    12:23am
    Apparently KPMG advised the LNP to look at Franking Credits and Negative Gearing as Australia cannot afford them.
    Farside
    31st May 2019
    9:00am
    you do not have to refuse the credits to know they are a handout, especially the refunds to non-taxpayers. Labor's approach to exempt pensioners was misguided and ultimately futile.

    The unanswered question for me is whether dividend franking has achieved its original intention of facilitating improved capital management, afterall Australian corporates need to attract investment. If franking is not fulfilling this purpose then it should join the list of countries that have abandoned the notion and consigned it to history.
    Rae
    31st May 2019
    2:09pm
    Farside obviously Australian businesses are not efficient. If they were we wouldn't need to have several million workers getting top up income payments. We also wouldn't have a balance of payments and a current account problem that is growing dismal.

    $17 billion is transferred overseas by individuals annually to support families.

    Privatisation is failing and so is excessive immigration.

    I prefer shares in companies that grow through sensible investment in the business rather than redistributing profits for tax relief. Boards decisions are being distorted by this need for retirement income.

    30 years of careless policy after policy must have consequences.
    Bakka
    30th May 2019
    12:53pm
    Never have I seen a group in our society being so vilified and" down shamed" for doing nothing more than what is legislatively legal.
    Just get over it you lot .. if still bitter and twisted in next 3 years , then vote against it again.
    Paddington
    30th May 2019
    1:24pm
    You won’t need to wait three years because the new government is checking the retirement income now. Somehow, it will be adjusted.
    Discontented
    30th May 2019
    1:24pm
    Bakka well said. The Labour party has caused a lot of bad feeling.
    Discontented
    30th May 2019
    1:24pm
    Bakka well said. The Labour party has caused a lot of bad feeling.
    jackie
    30th May 2019
    1:47pm
    Paddington, I hope so and it's very soon.

    Workers just got a 53cent a day pay rise which won't even cover their daily work commute.

    They shouldn't have to be burdened by this tax for people that are better off than them.
    Rae
    31st May 2019
    2:16pm
    Well lets hope the LNP actually do something about the very wealthy getting 75% of the franking credits because Labor's plan certainly didn't effect those people.

    Depending on how many hundreds of thousands of lower income earners become eligible for the aged pension remember that can be cut also if too many need to access it. Greeks learned the hard way about distortions to the taxes and had pensions and concessions cut.

    The wealthy there weren't affected though.

    jackie be pleased to know most workers in the bottom two deciles pay no tax and actually receive welfare top ups to income from Centrelink.

    It's the reason the bill has hit that $180 billion cost.
    Cautious
    30th May 2019
    12:53pm
    For the dumb sods who think it is free money:
    If I am a sole trader, how many times should I pay tax on my profit.. once.
    If I run a partnership, how many times should I pay tax on my profit .. once.
    If I am a company, how many times should I pay tax on my profit ... once.
    If I am an employee, how many times should I pay tax on my earnings .. once.
    No wait that makes it free money because you need to ignore what the boss has taken out and paid so you also need to pay tax when you get the money home.
    Mikko
    30th May 2019
    1:33pm
    Winners are grinners, get over it Sandi! There were many more bad Labor policies besides franking credits, negative gearing restriction and capital gains tax increases included. But their over-reach on a grandiose uncosted climate change policy was another big mistake (Don't ask "it's a dumb question ... no it's a dishonest question ... it's a magical mystical number" according to Bill Shorten. Thanks also to Bob Brown and his very timely Anti Adani convoy which sealed the deal for the LNP in Queensland who don't like a bunch of southern misfits telling them how to run their economy, create jobs and particularly, how to vote.
    DaveL
    30th May 2019
    1:38pm
    Again another article that is short on facts, and appears to have no understanding of the subject. Typical of this site.
    Unfortunate Labor has blown an reform in Franking Credits. As some writers say, Franking Credits as an overall policy needs reviewing. Double taxation should not be a reason to avoid tax. Company Tax and Individual Tax are two seperate issues.
    And remember there are abusers in tax and welfare.
    in2sunset
    30th May 2019
    1:39pm
    Franking credits do not affect me - but I have a good grasp of the process, and I absolutely agree with the current format. Leave it alone.
    rob101
    30th May 2019
    1:49pm
    Rubbish ,the shareholder hasnt paid the Company Tax!nor are you disadvantaged by the Company paying that Tax.you cannot call your self "Self funded" if you get free money from the Tax Payers.AND Pensioners get nothing!

    Rob101
    jackie
    30th May 2019
    5:04pm
    rob101, it’s all welfare when the taxpayer foots the bill.
    DaveL
    30th May 2019
    8:36pm
    Pensioners on Government pensions get their cash franking credits refunded. Just S F R would not have received their’s. So what’s your point.
    travelman
    30th May 2019
    1:54pm
    My, My, I really enjoyed reading your comments and there is one question I would ask, Are we really a democracy? Those franking credits introduced by John Howard had one purpose, to benefit the rich. What he didn't realise is some not so rich people had also bought shares with their hard earned savings. It was a parallel to Joe Hockey who thought rising fuel prices would not hurt the poor because many of them do not have cars. John Howard and Joe Hockey did not have a clue about ordinary people, they had, long ago lost touch with reality. For those of you who are getting franking credits - good luck to you but be warned, do not rely heavily on them, just see them as 'icing on the cake'. What John Howard did in his ignorance was to create a financial monster that is growing larger year by year. Before long we just won't be able to balance a budget into surplus and Scott Morrison will have to do something about it; we can't continue to rob 'Peter' to pay 'Paul' which is the standard practice of the Liberals and always has been. But another problem is looming that we can do nothing about, is the global financial situation which is not far from collapsing. Another recession? Perhaps worse, a depression like 1929, certainly identical conditions in 1928 to 1929 are rising today. You don't need to be a financial scholar to see that - we can all see it, it shows in your comments. In the depression of 1929 in America many rich were jumping out of skyscraper windows. They had lost everything and were now bankrupt and could not cope with that. The biggest lost they had was the share market, when overnight, their shares were suddenly worth nothing.
    I yearn for an Australian government to come into power that sees the danger, rolls up its shirt sleeves and gets to work unravelling the mess that previous governments including the current one, have created. True democracy is not us all being financially equal - no, that is communism, but should have its wealthy and not so wealthy living together where all have opportunity to prosper but also those who cannot achieve much, still have a good and, fruitful life far above poverty - that through sharing from one group to another. That is true democracy and from it comes a resilience and self protection against the failings of other nations.
    Can we be independent from other nations - no - but we can be sustainably independent against the financial misfortunes of other nations. We have everything we need - we are a rich nation, so rich we can stand alone. A good government will see that we have productivity for all the nation's needs. We have to stop making ourselves reliant on imports - it is taking away our ability to support ourselves by our own endeavour. It may seem strange but to deal with climate change properly, regardless of what the rest of the world is doing is extremely important. It is also allied to dealing with our growing problem of waste because that also will seriously effect our climate. Our sustainability can only be achieved if we stop polluting our country; it will carry a heavy cost to deal with now but far more cost if we don't deal it. I believe we are in an age where technology properly applied is the open door to our future, a bright and prosperous future, not just ourselves but the generations to follow.
    libsareliars
    31st May 2019
    1:19pm
    Very well said travelman.
    Rae
    31st May 2019
    2:21pm
    Excellent comment. So true.
    travelman
    30th May 2019
    1:54pm
    My, My, I really enjoyed reading your comments and there is one question I would ask, Are we really a democracy? Those franking credits introduced by John Howard had one purpose, to benefit the rich. What he didn't realise is some not so rich people had also bought shares with their hard earned savings. It was a parallel to Joe Hockey who thought rising fuel prices would not hurt the poor because many of them do not have cars. John Howard and Joe Hockey did not have a clue about ordinary people, they had, long ago lost touch with reality. For those of you who are getting franking credits - good luck to you but be warned, do not rely heavily on them, just see them as 'icing on the cake'. What John Howard did in his ignorance was to create a financial monster that is growing larger year by year. Before long we just won't be able to balance a budget into surplus and Scott Morrison will have to do something about it; we can't continue to rob 'Peter' to pay 'Paul' which is the standard practice of the Liberals and always has been. But another problem is looming that we can do nothing about, is the global financial situation which is not far from collapsing. Another recession? Perhaps worse, a depression like 1929, certainly identical conditions in 1928 to 1929 are rising today. You don't need to be a financial scholar to see that - we can all see it, it shows in your comments. In the depression of 1929 in America many rich were jumping out of skyscraper windows. They had lost everything and were now bankrupt and could not cope with that. The biggest lost they had was the share market, when overnight, their shares were suddenly worth nothing.
    I yearn for an Australian government to come into power that sees the danger, rolls up its shirt sleeves and gets to work unravelling the mess that previous governments including the current one, have created. True democracy is not us all being financially equal - no, that is communism, but should have its wealthy and not so wealthy living together where all have opportunity to prosper but also those who cannot achieve much, still have a good and, fruitful life far above poverty - that through sharing from one group to another. That is true democracy and from it comes a resilience and self protection against the failings of other nations.
    Can we be independent from other nations - no - but we can be sustainably independent against the financial misfortunes of other nations. We have everything we need - we are a rich nation, so rich we can stand alone. A good government will see that we have productivity for all the nation's needs. We have to stop making ourselves reliant on imports - it is taking away our ability to support ourselves by our own endeavour. It may seem strange but to deal with climate change properly, regardless of what the rest of the world is doing is extremely important. It is also allied to dealing with our growing problem of waste because that also will seriously effect our climate. Our sustainability can only be achieved if we stop polluting our country; it will carry a heavy cost to deal with now but far more cost if we don't deal it. I believe we are in an age where technology properly applied is the open door to our future, a bright and prosperous future, not just ourselves but the generations to follow.
    Aussiefranko
    30th May 2019
    1:57pm
    Am I alone in wondering whether ‘Your LifeChoice-Simplifying Retirement’ is a branch of the Labor Party? There is absolutely no balance in some of these articles. I live in NSW so don’t know anything about ‘leafy Kew’ but I do know about the hard working people of Newcastle who appreciate the assistance from franking credits in their retirement. Actually franking credits are a LifeChoice. Believe me it assists in simplifying retirement! Chris Bowen of the Labor Party gave the best advice that we heard during the election campaign. He reckoned that if you don’t like Labor policies (referring to franking credits) then don’t vote Labor. Thanks Chris! Nicely thought through. I didn’t vote Labor and it worked a treat! Chris now finds himself in Opposition and even had to withdraw his name from being Leader of the Opposition. He is really going backwards. Why are we still going on about franking credits? Doesn’t everyone know that franking credits and Chris is yesterday’s news!
    Kenmaur
    30th May 2019
    2:33pm
    If someone is getting franking credits surely that would mean they have investments therefore not entitled to an aged pension, or at the very least a part pension, so they would not be a drain on the taxpayers or am I missing something..
    Farside
    30th May 2019
    3:25pm
    you are missing something. Pensioners have a generous allowance for investments.
    Old Man
    30th May 2019
    4:25pm
    Yes Kenmaur, you are missing a lot. You may need to check the government website that explains how much an age pensioner can own and earn to be eligible for the full pension. Here's a link for the assets test: https://www.humanservices.gov.au/individuals/services/centrelink/age-pension/how-much-you-can-get/assets-test/assets#assetstestlimits
    jackie
    30th May 2019
    5:06pm
    Old Man, all the more reason pensioners should stop complaining about not having enough.
    Discontented
    31st May 2019
    1:51pm
    That's hit the nail on the head Kenmaur
    Discontented
    31st May 2019
    1:51pm
    That's hit the nail on the head Kenmaur
    Rae
    31st May 2019
    2:28pm
    Your missing a lot actually. We all are because nobody knows how many or how much except the tax office. You'd expect some real figures to be available if the true situation instead of what we believe or think or feel was to be out in the open for sensible decision making.
    Discontented
    2nd Jun 2019
    12:36pm
    Well said Kenmaur,my dividend on shares and franking credits falls well short of the pension so I am saving the taxpayer money. Where's the love.
    Discontented
    2nd Jun 2019
    12:36pm
    Well said Kenmaur,my dividend on shares and franking credits falls well short of the pension so I am saving the taxpayer money. Where's the love.
    B5YCK
    30th May 2019
    3:06pm
    As expected my comment was taken off.
    Typically if you do not sing of the same song sheet as the left leaners you comment is not welcome.
    The truth must hurt to your life choices.
    Farside
    30th May 2019
    3:58pm
    If you expected your comment to be removed then why draw attention to it? Relevance deprivation? What was the nature of the comment? My observation has been the YLC admins seem to have a higher level of tolerance than many sites.
    Old Man
    30th May 2019
    4:27pm
    Is that right Farside? I posted a political cartoon that was not kind to Shorten and it was removed together with all of the responses. I posted it again with a comment about how the first one was removed and, thankfully, that post was allowed to stay. No explanation, no apology, just YLC censorship.
    Farside
    30th May 2019
    8:05pm
    I can only go by what I have seen in the posts Old Man, there have been plenty of comments that would not be said in public without repercussion if not for the anonymity provided here.
    johnp
    2nd Jun 2019
    1:25pm
    OM. If you want cartoons watch childrens morning TV !
    Not a Bludger
    30th May 2019
    3:19pm
    Oh Lordy Lordy - what a completely misleading article.
    The effective withholding tax paid the company is 30% of the gross dividend amount - and this is attributal to the taxpayer (ie company or individual) to claim as part of his/her/their taxable income/tax paid deduction - thus avoiding taxing the same income twice ie double taxation (understand that the company tax rate is 30%).
    This is not Free Money!
    The alternative is to pay the gross dividend amount to the taxpayer who then lodges their tax return in the normal way and pays/ gets a refund according to their circumstances.
    Either way, a retiree with no other income gets the same refund quite properly under tax law and any other taxpayer has the benefit credited to his/her/their gross tax bill.
    No free money to be seen.
    The difference is that the government gets the 30% earlier under the current system which is a significant benefit.
    Farside
    30th May 2019
    4:08pm
    Assume a company's shareholders comprised entirely pensioners and low-income SFRs. The franking credits are refunded to the shareholders and effectively cancelling out the company tax paid, in other words free money. This is the crux of the problem KPMG raised last week in relation to erosion of the company tax base.
    Not a Bludger
    30th May 2019
    6:22pm
    Far side - you misunderstand completely.
    An employee on PAYG pays no tax on the first $19,000 approx of their earnings at tax time and gets a refund for any tax paid during the year
    A retiree the same with the company tax paid on franking credits gets the same refund.
    Rae
    31st May 2019
    2:31pm
    If tax is an issue why tax cut after tax cut? Surely franking credits is an easy form of getting money out to support business in the community. Beats one off $900 payouts.
    Cowboy Jim
    30th May 2019
    3:29pm
    Keep it simple just for once - the ones with franking credits like them and the others think: "Why not me??" Just jealousy. We got rid of all our shares and we are spending the money so no more concern. BTW we never collected the 'free money' since we no longer furnish tax returns. If you have family you keep counting pennies if not you are free to spend your stuff and that is what I am doing. On this forum a lot of people have a say about franking credits without ever owning any of the shares. Just stupid jealousy of people who never had anything and never will amount to anything. Sad really.
    Discontented
    31st May 2019
    1:56pm
    ride them Cowboy, don't mince your words do ya
    Discontented
    31st May 2019
    1:56pm
    ride them Cowboy, don't mince your words do ya
    Aussiefranko
    31st May 2019
    4:52pm
    Hey Cowboy

    It doesn’t matter that you have not furnished a tax return for years. There is a special return for franking credits not claimed over past years. Contact the Tax Office and ask for Refund of Franking Credit Application and instructions for each particular year not claimed. I believe the form number is NAT 4105. Once you get hold of the forms for each year you can lodge these refund applications for previous years by post. The form is very simple to complete.
    ozrog
    30th May 2019
    3:44pm
    Only applies to the 4% of retires and they are the richie rich of retires no wonder the younger generations hate the baby boomers so much. Gravy train must end as KPMG are suggesting.
    Farside
    30th May 2019
    4:13pm
    The boomers are in god's waiting room and it is only time until they depart in big numbers. The millennial ruling class will inevitably seek to rebalance the scales through inheritance, property and transaction taxes with the same sense of self-righteousness the boomers showed them. Karma can be a bitch.
    Paddington
    31st May 2019
    12:38am
    Yes, there is much being said about the generational dissatisfaction. Unfortunately, we are all getting treated as the same group.
    Rae
    31st May 2019
    2:36pm
    If the recession we have to have turns up that Generation will most definitely learn how lucky and well off they actually are. Nothing like tough times to hew character.

    That softness that finds other people's opinions intolerable could very well get a dose of reality which would be of benefit although unfortunate.
    Discontented
    2nd Jun 2019
    12:43pm
    Jealousy is the strongest emotion Farside and hatred will eat at your being
    Discontented
    2nd Jun 2019
    12:43pm
    Jealousy is the strongest emotion Farside and hatred will eat at your being
    Farside
    3rd Jun 2019
    12:31am
    hatred eating whose being Discontinued?
    Ny19
    30th May 2019
    5:26pm
    Receiving franking credits is like receiving a pension or part pension with no strings attached because it is government money paid directly to the shareholder. When many of us lost our part pensions in 2017 those who kept their money in the bank losing interest just had to cop it. Those who were smarter bought shares and effectively replaced their losses with franking credit receipts. Understandable that many more have now cottoned on to this little scheme since it was highlighted for the election but those who rush to buy shares will be risking their capital if we go into recession later this year which economists are saying is likely. If/when shares crash they will suffer more stress than those keeping their money safe. Of course there is also the risk that the Morrison government will double cross them too. They lied through their teeth during the campaign and I bet secretly thought Labor’s idea for retrieving the money was a good one. If they don’t have the guts to run with it though they will hit us all for money in some other way, like raising the gst or taxing our Super funds. At least Labor were up front but this LNP mob kept everything under wraps so cannot be trusted.
    Mary
    30th May 2019
    5:28pm
    I ask a question. Why would Shorten, Morrison, DeNatalie and the like, Industry Super, pensioners, Doctors, CEO's and wage earners that earned enough, have been able to keep this "gift" under Labors proposed policy while it was taken away from LOW earning smsf retirees.. would that have been fair? just asking
    Sundays
    30th May 2019
    6:20pm
    Mary, because those people pay tax on their dividends which have to be grossed up and included on their tax return, and the Franking credit offsets the tax they pay. Retirees with SMSF pay no tax, but benefit from a full refund of the Franking credit.

    You get more back than any wage earner paying 30% tax, plus Medicare levy so is that fair?
    Captain
    30th May 2019
    8:57pm
    Sundays, pensioners do not pay tax on their dividends.

    If I work and pay tax for 45 or more years, self educate myself and through hard work and perhaps some luck, then at the the end of my working life have saved enough to be a self funded retiree, do I deserve to be painted as a freeloader?

    Some have peed their wages up against the wall, smoked and gambled yet receive a taxpayer funded pension. Others have not been as fortunate in life and just don't receive the goods for their labours.

    Is it fair, that under a Labor policy, a pensioner couple would receive their Franking Credits of shall we say $10,000 per annum, plus $36,000 pension and concessions upwards of $4,000. A yearly total of $50,000, and a SFR couple receiving dividends of $50,000 per annum, no pension, no concessions and then not receive their Franking Credits of $12,000. All the years of toil and sacrifice and be penalised whilst pensioners receive a taxpayer funded pension.

    According to some people that is fair. I saved money from my early work days in the hope that I would not have to rely on a taxpayer pension in my retirement, and for that I am regarded in the same light as a common thief.
    Sundays
    31st May 2019
    11:23am
    Captain, I question your figures. For a home owning couple to receive the full OAP their assets have to be less than $387,500. I doubt they could achieve Franking credits of $10k per year. However, there are many part pensioners who are better off than $50k p.a. In my opinion, they are the smart ones. Labor’s policy was flawed in exempting them.

    My point was that SMSF that don’t pay tax get a bigger refund than a average worker with shares and certainly much more than other SFR with shares in their own right and not through Super.

    There are too many anomalies, and Granfathered rules in the current system. An overhaul is needed, but I don’t trust this Government to be equitable
    Captain
    31st May 2019
    11:43am
    Sundays, my point is that you can change the F C figures for pensioners to any figure, they still would have received the refund and SFR's would not. The problem is some of the retired population would receive the credits and some would not receive them. Unfair really. It must be all receive the credits or no-one receives them.

    I have lobbied my local MP an prospective Opposition MP's for tax rule changes and they are not interested. Too difficult for them.
    Adrianus
    2nd Jun 2019
    9:39am
    Mary, it is not fair. And that's precisely why Labor lost the unlosable election. They bashed us senseless in the media with their lie about being fair while at the same time showing us how hypocritical they are with their unfair policies. And Sundays, you are not all over the facts about how our imputation system works.
    Eddy
    30th May 2019
    5:50pm
    I look at tax refunds for tax one has not paid, such as refunding franking credits, the same as so called "bottom of the harbour schemes" or using overseas tax havens to avoid taxes. It may be legal but is nether ethical or moral. Investment taxes, such as CGT, excises, company tax and stamp duty etc are paid irrespective of the investors tax status. If people think would be disadvantaged by losing refund of of franking credits then they should consider rearranging their investment strategies. What started as a minor expense on the budget has now turned into a major cost to the public purse, reportedly over $6 billion and increasing. It must end before it adversely impacts the tax base.
    Mary
    30th May 2019
    7:33pm
    So Eddy. Under Labors policy the Small earning SMSF retirees would have been smashed by taking away their "gift" of franking credits which is in your view is fair because they don't earn enough to pay enough tax to claim … Ok but I ask, why do the multi millionaire pollies from every party, get the "Gift"? Why does anyone that earns more than 45k get the "Gift" of a full refund of franking credits.. oh right, they paid enough tax so they are entitled to it... I am one of those that earn't more than enough this financial year to use the franking credits to lower my tax due. In doing so the government paid me back 30% of the 47% tax they took.. so I was $18000 better off. I got a sizeable refund... that's $18000 the government gave me back. You seem informed. We can deny franking credits to small earning, self funded, smsf retirees and save 6 billion. true. But I would like to know what amount is lost to the government budget by refunding the "Gift" of franking credits for the 11 million that pay enough tax to be eligible for "the Gift"...
    Captain
    30th May 2019
    9:00pm
    Eddy, franking credit refunds are nothing like "bottom of the harbour" schemes. Get a grip and incidently read some history on what you are writing about.
    ex PS
    30th May 2019
    6:31pm
    The people have spoken, the majority agreed to support Franking Credits. I get them even though I spoke against them, I will continue to take advantage of the status quo. We have got the government we deserve, I think it is up to the ALP to support all of the governments policies that were outlined in their campaign, we should be left in no doubt as to what a right wing government is capable of.
    Adrianus
    1st Jun 2019
    2:30pm
    exPS, how thoughtful of you. If only there was a way to brainwash the entire population into wanting to donate extra tax? What was the last thing you remember? If you can trace back to your early years as a taxpayer?
    Mimi
    30th May 2019
    6:59pm
    For heavens sake get a grip Sandi
    It has been made very clear in previous articles what this is about and it is not free money.
    If all insist on getting rid of franking credits then the fair way is to remove the credit for all - the rich, the pensioners, the superannuation funds etc. Then watch the backlash! Treat everyone the same and not retirees as cash cows even if you feel entitled and and you think baby boomers have saved more than they deserve. Your Choices is basically helpful but this is getting a bit much. Incidentally I don't have any shares associated with franking credits
    OlderandWiser
    30th May 2019
    7:14pm
    This government has lied, cheated, decieved for the last 6 years & gotten away with it by being reelected for another 3. Frsnking credits are on their list but they won't make it an election issuecyhey will just do it.
    Mary
    30th May 2019
    8:11pm
    Ok SFR that is your opinion and I humbly disagree.. My opinion is that the liberal govt won't touch franking credits...it is political poison to touch now... then again we will see... and by the way All Governments lie cheat and deceive and get away with it, whether they are lib, lab, lab/Gr.. You have lived long enough to have seen that surely.
    Paddington
    30th May 2019
    8:42pm
    Mary, it will come out of the review and thus be justified.
    OlderandWiser
    30th May 2019
    8:53pm
    We will see Mary. Maybe the ALP have lied but nowhere near the extent that this current greedy corrupt government has stooped to.
    FC should go & companies will need to adjust their dividends to suit. No grandfathering which just adds to admin cost.
    Next budget I recon.
    srs21
    30th May 2019
    9:15pm
    Franking credits come from the government purse where pensions come from. That means that those SFR are helping themselves to public money....ie.. they’re not SFR
    Aggle
    30th May 2019
    9:57pm
    If franking credits are costing the country too much, as Labor claimed,what's wrong with capping them ? At least that way it would be much fairer than Shorten's pre-election proposal, which allowed some to keep theirs whilst denying others theirs.
    Rae
    31st May 2019
    9:08am
    The savers have been buying shares in most cases for decades. The dividends and credits just built that share portfolio. One way to get into the supposed "wealthy group".

    The spenders will continue visiting their clubs, betting on lotto and sitting around in cafes as they always have. All excellent ways of remaining in the group called "the poor".

    Either way you get free Government money.

    But just enjoying life and not saving can return %36 000 a year plus concessions.

    Land of Milk and Honey isn't it.

    Problem is the share and saving option comes with big risks which is why the majority don't join in.

    Losing is far worse than not winning in most minds.
    johnp
    31st May 2019
    4:06pm
    Agree with Rae re.
    "just enjoying life and not saving can return $36 000 a year plus concessions"
    I should have done this; like for instance bought a luxury home before retirement age then enjoy the $36 000 a year plus concessions. Too late now as receive modest pension from the super fund and just little too much assets to get even a part pension.
    pjvixen
    31st May 2019
    4:04pm
    This is not free money. We save up money and invest it in the company of our choice. This company then pays tax on the money it earns and we get a return for lending them the money. This income is taxed at the company tax rate. Any difference between the tax already paid and the tax due by the shareholder to the tax office is then treated as a tax credit. If this money is taxed again the hands of the investor it would be taxed twice.
    Adrianus
    1st Jun 2019
    2:39pm
    What an interesting article!
    Sandi Keene has $15,000 of Franking Credits in her SMSF and had no idea where they came from. But says she doesn't want them? I can only imagine that she thinks her SMSF should be paying tax at the Company tax rate and not the concessional rate of 15%?
    Thanks to God we don't have environmental experts dictating financial policy.
    Captain
    1st Jun 2019
    4:30pm
    Ms Keane apparently has a Masters Degree In Journalism and some of her work on the environment was incorporated into Labor's Clean Energ Bill
    Ms Keane's SMSM (managed by some ethical fund) has $15k of Franking Credits that she knows nothing about. Well it goes to show that supposedly intelligent people are not immune to possessing the stupid gene.

    In my experience, the people I have met who own shares that give a dividend know about Franking Credits. Besides her Super Fund should be audited each year and a refund issued. I suppose if you don't look at the financial report the Auditor must send to you, then you would not know about the credits and if that is the case why write about a subject you have no knowledge of?
    Adrianus
    2nd Jun 2019
    9:29am
    Yes sir Captain, one would wonder why environmentalist Sandi Keene is being praised by the left as someone who has expert knowledge of our Imputation System. I wonder what the union reps told her tweeter mate Geoff about who was benefiting from the franking credits there LOL. And why there plan to remove the FCs from SMSFs (yep like the one Sandi has) came unstuck. LOL This would be hilarious if it wasn't so funny. :)
    I thought we should all be happy that people are more informed about the imputation system? So why is Sandi Keene not so? Could it be that the real danger to our democratic way of life is not the Sandi Keene's but the high proportion of those who believe these people?
    P$cript
    4th Jun 2019
    11:15pm
    Let's just call it for what it is "Franking Pension"